Appropriation Bill (No. 6) 2003-04

Bills Digest No. 143 2003-04

Appropriation Bill (No. 6) 2003 04

WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.

Under section 83 of the Constitution, no
monies may be withdrawn from the Consolidated Revenue Fund except
under an appropriation made by law . Laws authorising spending are
either:

special appropriations, or

six (usually) annual appropriation acts.

Special appropriations which account of about
75 per cent of spending are acts that provide money for particular
purposes. For example, age pensions, disability support pensions
and the Newstart Allowance are paid under the Social Security
(Administration) Act 1999, while the Family Tax Benefits A and
B are paid under A New Tax System (Family Assistance)
(Administration) Act 1999.

Section 53 of the Constitution provides that
the Senate may not amend laws appropriating money for the ordinary
annual services, while Section 54 requires that there be a separate
law appropriating funds for the ordinary annual services of the
government. That is why there are separate bills for ordinary
annual services and for other annual services. There is a separate
Bill for the Parliamentary departments because the services they
provide are not considered to be either ordinary or other annual
services. The distinction between ordinary and other annual
services was set out in a Compact between the Senate and the
government in 1965 (the Compact was updated to take account of the
adoption of accrual budgeting).

The Bills appropriate funds to departmental
outputs and administered expenses. Departmental outputs are
expenses that agencies control. Examples are salaries and other
day-to-day operating expenses. Administered expenses are those that
agencies administer on the Government s behalf. The examples of
special appropriations above are administered expenses.

Departmental outputs and administered expenses
contribute to outcomes. They are the results or consequences for
the community that the Government wishes to achieve.

As noted, there are usually six annual
appropriation bills of which three are introduced when the Budget
is brought down. However, funding requirements often change after
the Budget is brought down. Governments make new policy commitments
which have to be funded. Agencies reassess their requirements and,
if necessary, submit requests for additional funding. The
Government may agree to additional funding if the amounts in the
first three Appropriation Acts are inadequate. The process whereby
additional funds are provided is called
additional estimates and begins around November. The approved
additional estimates are normally incorporated into three
appropriation bills, which are introduced in the spring sitting of
Parliament. They are Appropriation Bill (No. 3) for ordinary annual
services, Appropriation Bill (No. 4) for other annual services, and
Appropriation (Parliamentary Departments) Bill (No. 2) for the
Parliamentary departments.

Appropriation Bill (No. 5) 2003 04 and
Appropriation Bill (No. 6) 2003 04 are unusual in that they are
supplementary to the usual additional estimates bills.
However, they are not unusual in that they are, to all intents and
purposes, the same as the usual additional estimates bills.
Appropriation Bill (No. 5) 2003 04 appropriates additional money
for ordinary annual services while Appropriation Bill (No. 6) 2003
04 appropriates money for other annual services.

The data in the Bills are aggregated.
Additional information can be found in Portfolio Supplementary
Additional Estimates Statements.

The amount available for agencies spending on
departmental and administered items is specified in Schedules. The
total specified in Schedule 1 of Appropriation
Bill (No. 5) is $604 million, while the total specified in
Schedule 2 of Appropriation Bill (No. 6) is $183
million. The largest item in Appropriation Bill (No. 5) is $450
million for the Australian Rail Track Corporation, which will
reportedly use the funds to upgrade the section of the interstate
(standard gauge) rail network that runs between Brisbane and
Sydney.(1) The largest item in Appropriation Bill (No.
6) is $129 million for the Health and Ageing portfolio.

Clause 9 deals with reduction of
appropriations upon request . In this context, it is important to
distinguish between the processes for departmental
appropriations and annual administered appropriations. In
short:

departmental appropriations do notlapse at
the end of the financial year. They therefore remain legally valid
until spent. The unspent balances of all departmental
appropriations remain available across all financial years unless
the Finance Minister withdraws drawing rights

annual administered appropriations are determined by the Finance
Minister. If the amount determined is less than the original
appropriation, the difference lapses.

The Introduction to Budget Paper No. 4
explains this more fully:

The annual appropriations acts are not expressed
in terms of a particular financial year and so do not automatically
lapse. Amounts appropriated for departmental expenses and for
non-operating costs(2) can be subject to a lapsing
process first introduced in the additional estimates appropriations
bills for 2003-2004. Under this process, on request in writing from
a responsible minister for an agency, the Finance Minister may
issue a determination to reduce the agency s departmental expense
or non-operating costs appropriation. Requests for amounts to be
lapsed may arise, for example, because the appropriation is no
longer required. Until the Finance Minister issues a determination
under this process, moneys appropriated for departmental expenses
and non-operating costs may be issued from the CRF in the budget or
later years.

Appropriations for administered expenses are
subject to a determination by the Finance Minister on the amounts
to be issued. The effect of that determination is to prevent any
part of the appropriation that has not been expensed in the year
from being issued from the CRF. By convention the Finance Minister
issues determinations in relation to administered expenses
appropriations following the completion of each financial
year.(3)

Clause 10 deals with net
appropriations . Subclause 4 deals with items that are taken to be
administered marked net appropriations , and adds paragraph 4(e)
which provides that the administered item for outcome 2 of the
Department of Transport and Regional Services is also to be marked
as a net appropriation. However, the Bill does not define net
appropriations. Subclause 10(2) contains a reference to section 31
of the Financial Management and Accountability Act 1997,
which deals with net appropriations, but even that Act does not
define net appropriations.

Richard Webb
24 May 20004
Bills Digest Service
Information and Research Services

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